Forum: Forget the marketing gimmicks: It’s time for colleges to cut costs

By Jeffrey J. Selingo

Published 9:32 pm, Monday, May 29, 2017

Traditionally, May 1 is the end of the college search for high-school seniors. That’s when deposits are due for a spot in next fall’s freshmen class on campuses nationwide.

But the college decision process now seems more fluid than ever before. First came the news this month that the discount colleges are offering on tuition to new students has reached a record 49.1 percent. That was followed by reports that several schools are sending messages to accepted students they haven’t heard from offering them more financial aid in the hopes they might enroll. And dozens of schools report they still have space available for new students in their classes this fall.

Colleges are pulling out all the stops to recruit students, get them to enroll, and now keep them engaged over the summer when students sometimes change their mind and colleges experience what they call enrollment “melt.” But rather than always looking at the revenue side of the ledger by figuring out how to attract more students with marketing gimmicks and constant discounting, colleges should start studying the expense side as well for ways to lower their costs.

First, colleges need to reimagine how and where students are taught. Spending on instruction varies widely among schools, from around $6,600 per student at regional public colleges to $21,400 at private research universities, according to the Delta Cost Project. However, spending more on classroom instruction doesn’t necessarily buy better outcomes for students.

While not the panacea that many in Silicon Valley suggest, technology can reduce instructional costs with the same or even better results. The nonprofit National Center for Academic Transformation has redesigned courses on more than 200 campuses, reducing costs an average of 34 percent by using, among other things, software and low-stakes testing.

Many campuses have found their own ways to reduce instructional costs. At the University of Central Florida, around one-third of courses for residential students take place fully or partially online, eliminating the need for several classroom buildings.

Even small changes in behavior can yield significant savings. Take the use of classroom space. Many students dislike early morning or Friday classes, forcing schools to offer multiple sections in a variety of time slots. Elon University discovered many of those sections weren’t filled to capacity. That’s like an airline flying empty seats. So Elon reduced the number of course sections and ended up saving nearly $1 million in the process.

Another strategy to cuts costs is to declare a truce in the amenities arms race. UCF is now planning a “lazy river,” part of a $25 million upgrade to athletic facilities to help recruit star athletes. That echoes what others have done. Last decade, many schools went deep into debt to build state-of-the-art classroom buildings, palatial recreation centers and plush dorms to keep up with competitors doing the same thing.

Many campuses are still paying off that debt even as they are forced to spend more on student services, from career counseling to mental health services. That kind of spending is growing fast. At private colleges and elite public schools, student-service expenses jumped more than 20 percent over a decade, according to the Delta Cost project. In recent years, spending on administration and maintenance rose faster than instructional spending at many four-year colleges.

The problem is students and parents remain willing customers, “happy to have their tuitions raised for better dorms, high-speed internet, and better food,” said Jane Wellman, the former longtime head of the Delta Cost Project.

But if Harvard replaced all of its dorms with rooms that were comparable to a jail cell, I doubt students would refuse to go there. Georgia State University tested that theory in 2009, when it opened a new residence hall that was reminiscent of those from a generation ago: double rooms basically twice the size of a twin bed, common bathrooms, and a dining hall.

“We built the least expensive rooms we could come up with,” said Tim Renick, Georgia State’s vice president for enrollment management and student success. Students signed up in droves. Since it was built, the freshman hall has filled up before other residences as students can get a room there plus a meal plan that is equal to just the cost of the apartment-like residence halls.

Finally, colleges need to rethink one of the biggest drivers of costs-personnel, particularly the need to have more flexible work forces. Right now, their faculty ranks are largely immovable because of tenure. An idea that higher education needs to adopt is one floated by, among others, Larry Bacow, a former president of Tufts University, that would put a clock on tenure. Instead of a lifetime guarantee, tenure would be for a specific time commitment-perhaps 20, 25, or 30 years-followed by one-year contracts.

Colleges can only discount their prices so much until they are forced to cut actual costs given reduced revenues. If recent news reports are any indication, the pricing strategies that colleges have utilized for several decades to attract students seem to be coming to an end. So college officials will be forced to confront their expenses whether they want to or not.